Correlation Between Global X and Invesco Global

Can any of the company-specific risk be diversified away by investing in both Global X and Invesco Global at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Global X and Invesco Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global X Uranium and Invesco Global Clean, you can compare the effects of market volatilities on Global X and Invesco Global and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Global X with a short position of Invesco Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Invesco Global.

Diversification Opportunities for Global X and Invesco Global

0.39

Correlation Coefficient

Global X  Invesco Global

Weak diversification

The 3 months correlation between Global and Invesco is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Global X Uranium and Invesco Global Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global Clean and Global X is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Global X Uranium are associated (or correlated) with Invesco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global Clean has no effect on the direction of Global X i.e., Global X and Invesco Global go up and down completely randomly.

Pair Corralation between Global X and Invesco Global

Considering the 90-day investment horizon Global X Uranium is expected to under-perform the Invesco Global. In addition to that, Global X is 1.72 times more volatile than Invesco Global Clean. It trades about -0.07 of its total potential returns per unit of risk. Invesco Global Clean is currently generating about -0.05 per unit of volatility. If you would invest  1,172  in Invesco Global Clean on December 27, 2024 and sell it today you would lose (65.00) from holding Invesco Global Clean or give up 5.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Global X Uranium  vs.  Invesco Global Clean

Global X Uranium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Invesco Global Clean

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Global Clean has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Invesco Global is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global X and Invesco Global

The main advantage of trading using opposite Global X and Invesco Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Invesco Global can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Invesco Global will offset losses from the drop in Invesco Global's long position.

The idea behind Global X Uranium and Invesco Global Clean pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.